Shell has announced plans to end its involvement in "all Russian hydrocarbons". In a volte face from its position over the weekend, the company said that "as an immediate first step" it will stop all spot purchases of Russian crude.
Chief executive Ben van Beurden apologised for Shell's decision last week to purchase a cargo of Russian crude, and he reiterated that the company will commit profits from the remaining amounts of Russian oil that it processes to a dedicated relief fund. Shell was condemned by Ukraine's foreign minister at the weekend after it agreed to buy a mid March-loading cargo of Baltic Urals from trading from Trafigura on 4 March.
Shell's decision to stop buying Russian crude comes after TotalEnergies' chief executive Patrick Pouyanne said yesterday that his company's traders have not taken Russian oil since the start of the Ukraine invasion. Pouyanne said TotalEnergies is facing no pressure from European countries to reject Russian gas, while he also noted that Russian gas producer Novatek — in which his firm holds a 19.4pc stake — is not under sanctions.
Meanwhile, Argus understands that BP has stopped all new oil contracts or deals with Russian entities, which include Russian-flagged vessels, Russian ports and Russian counterparties. But it will continue to meet contractual obligations of existing contracts and deals, and it reserves the right in the future to enter into a new contract if this were deemed essential to security of supply.
Shell said it will completely withdraw from its involvement in crude, refined oil products, gas and LNG "in a phased manner", in line with new guidance from western governments. As well as an immediate halt to buying Russian crude on the spot market, the company said it will not renew term contracts. Shell took 2.18mn t (44,000 b/d) of seaborne Urals last year and was due to take 100,000 t/month (24,000 b/d) of Urals through the Druzhba pipeline for Germany's Schwedt refinery this year, according to Argus data.
The company is changing its crude supply chain to remove Russian volumes. "We will do this as fast as possible, but the physical location and availability of alternatives mean this could take weeks to complete and will lead to reduced throughput at some of our refineries," van Beurden said.
Van Beurden pointed out that Shell's phased withdrawal from Russian oil products, pipeline gas and LNG will be "a complex challenge" that will require "concerted action by governments, energy suppliers and customers". Shell is also shutting its service stations in Russia along with its aviation fuels and lubricants operations in the country.
"Our actions to date have been guided by continuous discussions with governments about the need to disentangle society from Russian energy flows, while maintaining energy supplies," van Beurden said. "Threats today to stop pipeline flows to Europe further illustrate the difficult choices and potential consequences we face as we try to do this."
Russian deputy prime minister Alexander Novak said yesterday that Moscow could halt gas deliveries to Europe via the Nord Stream 1 pipeline in response to EU and US sanctions. Shell announced on 28 February that it will end its involvement in the Nord Stream 2 pipeline project and exit its partnerships with Russian gas giant Gazprom, including its 27.5pc interest in the Sakhalin 2 oil and LNG project in Russia's far east.
